As the U.K. trade association for the deep tech sector, we are naturally concerned, as many nations are, about the impact of potential U.S. tariffs being imposed on the U.K. and international semiconductor industry.

In summary, the tariffs pose a real problem for the reasons outlined below.

Any company (domestic or foreign owned) in the U.K. selling chips into the U.S. would likely be affected and since this would double the ‘price’ of these chips, margins could be wiped out and the chips become prohibitively expensive. In most markets, electronic system cost is always under pressure and so, semiconductor device margins are tight.

It is worth noting that the U.S. consumes about 25% of global chip production (China is second, also at about 25%). There are several globally significant digital chip companies in the U.S. (such as Nvidia, Intel, AMD, Qualcomm, IBM, and Broadcom) selling into AI, computing, cloud and communications. Most of this is fabless production, and much of the rest of the industry is not U.S. based at all. Hence U.S. electronics companies such as Apple, Microsoft and Cisco will still need to buy chips from abroad. TSMC’s facilities in Taiwan will also remain significant (see below), so a blanket tariff order seems highly unlikely.